This year the estimated average cost of a public/state college is $22,300, and the average price at private universities is $43,500 (including tuition, room, board, books and fees). The cost of college is rising faster than the rate of inflation, by approximately 3% annually for private schools and 6% annually for public universities.
With state budget cuts prompting colleges to cut core classes and add on extra fees, you will be lucky if your student gets out in four years for under $100,000. No wonder the percentage of Americans who say they are ‘very worried’ about affording college has risen steadily since 2007, last year surpassing concerns about affording retirement, according to Gallup polls.
Utilize Multiple Savings Secrets!
Below are some insider secrets from college counselors, administrators, and parents in the trenches. Though each strategy alone may only be worth a few hundred to a few thousand dollars, families who use several strategies may be able to cut costs by $10,000 a year – or more.
Shorten the Pain
Many students fail to finish in four years because they don’t plan out their required courses. Urge your child to plan each semester’s schedule with an academic adviser. Of course, you’ll save more money if your student finishes in less than four years. High school students may also build college credits through Advanced Placement tests or by taking dual credit courses while attending high school.
Milk the Tax Breaks
Pay for at least $4,000 of tuition, fees, and books from an ordinary checking, savings or taxable investment account – even if you have money earmarked in a 529 college saving account. That way you can claim the American Opportunity Tax Credit, worth up to $2,500, on your 2012 tax return (note: your annual income must be below $180,000/year). Then use 529 plan funds to pay remaining qualified tuition, fee and housing costs.
Save on Room and Board
The all-you-can-eat meal plans are really geared to the linebacker who has five meals a day. What if your child doesn’t always eat in the dining hall? Did you know that half of college students’ food purchases are made off campus? Most schools offer three to five meal plan options that range in price from $1,000 to $2,500 per semester. Got a kid who’s involved in Greek life? Some sorority and fraternity houses can be cheaper to live in than dorms or off-campus apartments, particularly if they include a meal plan.
Live Rent Free
Do the math! – It may make sense to purchase a home near campus, especially since mortgage rates are currently at historic lows. Then invite friends or other students to rent rooms. You may receive enough in rent to cover the cost of the mortgage. In addition, you may enjoy additional tax deductions for property taxes and interest paid.
Strategize with Credit Card Points
Some universities don’t add fees for credit card charges. If possible, pay all tuition, fees and dorm bills with a rewards credit card. Then immediately withdraw savings from your child’s 529 college savings to pay off the balance. You may earn enough miles to pay for your student to fly back and forth to school or even have enough points to pay for a family vacation.
Scholarships and Financial Aid
Do your homework and start early. Don’t wait until your child’s senior year. Talk with your high school counselor or college counseling center, as they are great resources for aid and scholarship information. Apply early and apply often! Many scholarships go unused because no one is aware of them. Also, don’t be afraid to apply for several scholarships. Below are a few websites you may help in your financial aid and scholarship search:
Hold Out and Negotiate
If your student is accepted to several colleges that offer partial tuition/merit scholarships hold out and negotiate for the best offer. Schools don’t want you to know this, but scholarships/aid can be negotiated. Hold your cards until the last minute. Some schools may up their scholarship/aid offer.
All of us at PartnersInWealth hope that you find these saving tips helpful in reducing the overall cost of sending your student to college.